Expanding the Consensus?

Geneva - Trade chiefs from the European Union, Brazil and the United States met yesterday in an effort to convince other World Trade Organization members of the benefits of an emerging understanding on how to approach a final Doha Development Agenda package, WTD has learned (WTD, 1/29/07).

EU trade commissioner Peter Mandelson suggested that the Group-of-20 market access formula for farm products, a Swiss coefficient of 15 for developing countries in cutting industrial tariffs and a possible $15 billion to $17 billion ceiling on domestic farm subsidies by the United States with clear disciplines represented the contours of an agreement, trade diplomats told WTD.

The three trade ministers - the EUs Mr. Mandelson, US Trade Representative Susan Schwab and Brazilian foreign minister Celso Amorin - met on the heels of an informal trade ministerial meeting in Davos over the weekend that paved the way for full resumption of all the negotiating bodies. The three are aiming to close a deal within the short window of opportunity - between now and the end of April, said trade diplomats.

World Trade Organization Director General Pascal Lamy - who also is the chair of the Doha Trade Negotiations Committee - called for an informal TNC meeting on Wednesday to discuss resumption of work.

Both Messrs. Mandelson and Amorin spoke to a meeting of the G-20 developing-country coalition. We are now embarking on a long series of meetings and intensive discussions that I am now more confident will lead us to a breakthrough, Mr. Mandelson told reporters after the meeting. He said the EU and the G-20 - as well as the other developing-country groups - have a clear idea about the emerging consensus for a breakthrough.

Subsequently, Brazil's Mr. Amorim met with USTR Schwab to discuss the nitty-gritty of the Doha package.

Sundays Day-Long Meeting

On Sunday USTR Schwab and Mr. Mandelson met for seven hours near Zurich during which both further improved their understanding on a range of issues - including farm domestic supports and market access, coefficients in a final nonagricultural market access formula, fishery subsidies and geographical protection for items other than wines and spirits, WTD was told.

The USTR also held a dinner meeting with Doha farm negotiations chair Crawford Falconer and NAMA chair Don Stephenson.

Following his own conversation over the weekend with the US and the EU trade chiefs, Mr. Amorim told G-20 members that there is evident now a qualitative change in the US position. Earlier the United States linked its positions on domestic support to its offensive demands on market access. Now, he commented, there is a clear shift in US thinking that it must improve its position to move the talks along. Mr. Amorim described the change as positive.

The Brazilian minister advised his allied G-20 negotiators that now is the time to come to a deal.

Commissioner Mandelson told the G-20 that the United States can easily cap domestic farm spending at $15 billion - from its official position of $22 billion - but only if spending limits are accompanied with clear disciplines. Disciplines will make or break the deal, he said. Whether the United States goes down to $15 billion, $16 billion or $16.5 billion will determine the EU market access offer for agriculture, he suggested. If the final US number does not include disciplines, then the EU market access offer will be just cosmetic, he added.

The EU trade commissioner went on to argue that the G-20 formula involving an average reduction of 54 percent tariff-cuts remains the landing zone for an agreement. He said Brussels is willing to go as far as it can, but, the final formula will be based on US domestic support of $15 billion.

Commenting on the central issues in the NAMA debate, Mr. Mandelson suggested a coefficient of 10 for industrialized countries and 15 for developing countries. He argued that paragraph-eight flexibilities for developing countries should not negate the objective of market access. Flexibilities, he said, should not shield products of trade interests to industrialized countries. In the meeting, India asked the EU trade commissioner whether Brussels would go along with the G-20 bands for developing countries. The United States - along with the Cairns Group of farm exporting nations - has stated it wants the same tariff bands for both industrialized and developing countries in the tiered formula for agricultural market access - which amounts to two-thirds of the market access applied to industrialized countries.

According to sources, Mr. Mandelson sidestepped the question. He suggested only that developing countries undertake two-thirds of industrial-country commitments on a proportional basis.

India's Concerns

India also sought out more about product-specific disciplines. It argued that the caps should result in drastic reductions of current payments. Commissioner Mandelson replied that the combined Aggregate Measurement of Support and the blue box cap would be around 40 percent.

On the number and treatment of special products, the Philippines asked Mr. Mandelson to clarify Brussels stance - an issue that has become ticklish in discussions between the United States and India. The issue of special products, the commissioner continued, has to be approached with reason or argument - and not to immediately reject the argument. He said it is important to help the United States secure special Presidential Trade Promotion Authority (see related report this issue). If members can find a nominal way of creating market access it would help.

Mr. Mandelson urged the Group-of-33 developing-country members to flesh out indicators. He suggested that the discussion between the United States and developing countries can happen more rapidly if the United States moves on domestic support. The commitment on special products will be significantly less, no question about that, he told the group.